2023 (4) TMI 951 - HC - Income Tax

Revised return of income in terms of the scheme of amalgamation approved by the NCLT - Assessment of income post-amalgamation - Period of limitation for revision of return expired - filing of modified return of income following business reorganization in terms of Section 170A - HELD THAT - Scheme of amalgamation was approved and sanctioned by the NCLT after the due date of filing the revised return for the assessment year 2016-2017. Supreme Court referred to the provisions of Section 139(5) of the Act and opined that the said provision would not be applicable in a case where revised return could not be filed on account of the time taken to grant sanction to the scheme of amalgamation by NCLT. Section 139(5) of the Act deals with filing of revised return within a period of one year upon discovery of an omission or wrong statement made in the initial return of income. Supreme Court also referred to Section 170 of the Act and held that it is incumbent upon the Income Tax Department to assess the total income of the successor company in respect of the previous assessment year after the date of succession. Income Tax Department is required to assess the income of the successor company after taking into account the revised return filed after amalgamation of the company. In the facts and circumstances of that case, Supreme Court directed the Income Tax Department to receive the revised return of income for the assessment year 2016-2017 filed by the appellants therein and to complete the assessment for the said assessment year after taking into account the scheme of amalgamation as sanctioned by the NCLT. Upon thorough consideration, we are of the view that the decision of the Supreme Court in Dalmia Power Limited 2019 (12) TMI 991 - SUPREME COURT is squarely applicable to the facts of the present case. It is because of circumstances beyond the control of the petitioner that the revised return could not be filed before the due date. However, under Section 170A of the Act, Income Tax Department is obligated to assess the total income of the assessee of the previous assessment year post-amalgamation.

Summary

Issues involved:
The issues involved in this case are related to the filing of a revised return of income for the assessment year 2021-2022 following an amalgamation of two companies, the applicability of Section 170A of the Income Tax Act, 1961, and the authority of the Income Tax Department to accept and process the revised return.

Filing of Revised Return Post-Amalgamation:
The petitioner sought direction to the respondents to accept the revised return filed after the amalgamation of two companies, as approved by the National Company Law Tribunal (NCLT) on 26.04.2021. The petitioner relied on the decision in Dalmia Power Limited v. Assistant Commissioner of Income Tax, emphasizing the need to revise accounts post-amalgamation.

Rejection of Revised Return by Respondent:
Respondent No.1 rejected the manual return of income filed by the petitioner, citing that it was beyond the due date for filing the revised return. The respondent stated that without an order of condonation of delay, the return could not be considered, leading to the petitioner filing a writ petition challenging this decision.

Applicability of Section 170A and Notification:
During the proceedings, the Senior Standing Counsel presented Section 170A of the Income Tax Act, 1961, inserted by the Finance Act, 2022, effective from 01.04.2022, along with a notification dated 19.09.2022 by the CBDT. However, as the assessment year in question was 2021-2022, these provisions were deemed inapplicable to the case.

Relevance of Dalmia Power Limited Case:
The judgment referred to the Supreme Court decision in Dalmia Power Limited, which addressed the filing of revised returns post-amalgamation. The Court highlighted the obligation of the Income Tax Department to assess the total income of the successor company after amalgamation, emphasizing the need to consider revised returns in such cases.

Court Decision and Order:
After thorough consideration, the Court found the Supreme Court decision in Dalmia Power Limited directly applicable to the present case. The Court set aside the order of respondent No.1 and directed the acceptance and processing of the petitioner's revised return of income for the assessment year 2021-2022 filed on 23.12.2022, in accordance with the law. Consequently, the writ petition was allowed without costs, and any pending miscellaneous petitions were closed.